Country Differences

IN

Political Systems

Political Economy
that the political,
economic, and legal
systems of a country
are not independent
of each other

Collectivism
and
individualism

Collectivism
A political system that
stresses the primacy of
collective goals over individual
goals.
Advocated by Plato in the
Republic.
In modern times, the
Socialists advocate

Socialism
Trace intellectual
roots to Karl Marx.
Argued that the
pay of workers does
not reflect the full
value of their labor.
Advocated state
ownership of
production
distribution,
andexchange(busine
sses), thereby
ensuring that
workers were fully

Two
Approaches
Communists:
Socialism is achieved
through violent
revolution.

Social Democrats:
Socialism is achieved
through democratic

Political
Systems

(The system of government in a

nation)

Individualism:
Opposite of Collectivism.
Individual should have freedom in
political and economic pursuits.
Advocated by Aristotle.
Private property is more highly
productive than communal property
and will thus stimulate progress

Political Systems
Hume (1711-1776)
Adam Smith (17231790)
John Stuart Mill (18061873)

Embodied in the U.S.

Declaration of
Independence.

Democracy and
Totalitarianism
Democracy

Government by
the people,
exercised either
directly or
through elected
representatives
.

Totalitarianism

Government in
which one
person or
political party
exercises
absolute
control over all
spheres of
human life and
opposing
political parties

Democracy
Safeguards to protect a
democracy:
Right

to freedom of expression,
opinion, and organization.
A free media.
Regular elections in which all
eligible citizens are allowed to
vote.
Universal adult suffrage.
Limited terms for elected
representatives.

Democracy

A fair court system

independent of the political
system.

A nonpolitical state
bureaucracy.

Relatively free access to state

Totalitarianism
4 major forms:

Communism
Collectivism

is achieved
through total dictatorship.

Theocratic
Political power is influenced
by religious principles.

Totalitarianism
Tribal
A political party representing the
interests of a particular tribe
monopolizes power.

Right-wing
Generally permits individual economic
freedom, but restricts political freedom
to prevent the rise of communism.

Economic Systems
Market Economy:
All productive activities are
privately owned.
Command Economy:
Goods and services produced,
their quantity, and prices are
determined by the
government

Economic Systems
Mixed Economy:
Parts of the economy are left to
private ownership and free market
mechanisms while other sectors are
state-owned and have government
planning.

State-Directed Economy:
The state plays a significant role
through its industrial policy and
setting national goals.

Legal Systems
Rules, or laws, that regulate behavior
and the processes by which laws are
enforced and grievances redressed
Property

Rights: the legal rights over

the use of a resource and the income
derived from it.
Private Action:
Theft, piracy, blackmail and the
like by private individuals and

Legal Systems
Public Action and
Corruption:
Violation

of property
rights by public officials,
such as politicians and
government officials, by
extorting income or
resources from property

Protection of Intellectual
Property
Property

that is the product of

intellectual activity.
Patent: through exclusive use
rights, it protects the inventor
of a product for a certain period
of time.
Copyright: Gives exclusive rights
to authors, composers,
playwrights and artists to
publish and dispense their work.

Protection of Intellectual
Property
Trademark: Officially
registered designs and
names that protect
owners product
designations.
Piracy remains a
significant problem in

Software Piracy by
Region

2000 Avg.

Figure 2.2

Software Piracy Losses by

Region 2000

Product Safety and

Product Liability
Product Safety:
Safety standards to which a
product must adhere.
Product Liability:
Civil and criminal penalties if
standards are not met.

Product Standards and

Ethical Dilemmas
Strong
Product
Standards

Weak
Product
Standards

Contracts
Common Law
Evolved in
England
Based on:

Tradition

Preced
Contracts ent

Custom
United States

Contracts tend to be
long

Civil Law

Code Napoleon
Detailed set of
laws organized
into Codes.
Europe
Russia
Japan
80 countries
Short contracts

Islam
Ultimate solution of
all problems.

Differences in Economic
Development
Gross

National Product
(GNP) Common
yardstick for measuring
economic activity.
Measures total value of
goods and services
produced annually..

Differences in Economic
Development
Doesnt consider the
differences in costs of
living.
Purchasing Power
Parity.
Uses U.S. cost of living
for basis of

PPP Index and GNP Data for Selected

Countries 2000

1-Innovation

&
Entrepreneurship
grows in Maket
economy.

2-Needs

strong

Economic Progress
Begets Democracy

Geography, Education
and
Economic
Development